Tax Officials Granted Authority To Reduce Or Waive Interest Penalties: CBDT

New Delhi, Nov 6 (KNN) In a significant move to provide relief to taxpayers, the Income Tax Department has introduced new guidelines allowing tax officials to reduce or completely waive interest payments on delayed tax submissions, subject to specific conditions and hierarchical approval processes.

The Central Board of Direct Taxes (CBDT), through a circular issued on November 4, has established a structured framework for interest reduction based on monetary thresholds.

Under this system, Principal Chief Commissioners can adjudicate cases involving interest dues exceeding Rs 1.5 crore, while Chief Commissioners are authorised to handle cases ranging from Rs 50 lakh to Rs 1.5 crore.

Cases with interest dues up to Rs 50 lakh fall under the jurisdiction of Principal Commissioners or Income Tax Commissioners.

This discretionary power stems from Section 220(2A) of the Income Tax Act, which typically mandates a one percent monthly interest charge on delayed tax payments following a demand notice.

However, the relief measures are contingent upon three crucial conditions including, the payment must pose a genuine hardship to the taxpayer, the delay should result from circumstances beyond the taxpayer's control, and the taxpayer must have demonstrated full cooperation during assessment or recovery proceedings.

The new guidelines represent a balanced approach between tax compliance and taxpayer considerations, providing a structured mechanism for addressing genuine cases of financial hardship while maintaining administrative oversight through clearly defined authority levels.

(KNN Bureau)